Time Frame : 15mins and above
Indicators : Average Directional Movement Index - ADX (Settings : 14) and Fractals
Forex system - "ADX + Fractals"
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Background on Fractals and ADX?
ADX Indicator or Average Directional Movement Index gives you a reading of how strong the market is trending. We will use this to our favor and combine it with Fractal Indicator to pick a high probablity trade. These indicators can be found by default in your indicators list on your Metatrader 4 platform. Fractals show peaks and dips. To explain it easier, a Up Arrow Fractal forms when there is a lower high on both sides of a candle. A Down Arrow Fractal forms when there are higher lows on both sides of the candle. Please note that fractals will only form when the candle closes with the given criterias of high lows or lower highs on both sides.
Understanding Strategy
When the ADX is trending by seeing the blue line rising steadily, we look for Fractals to jump in the trend. We do not take all Fractals, only the ones with tails pointing to the Fractal. Let me explain this in a bit more detail and as simple as possible with some examples. (I will also be posting a video tutorial with this to help understand this method.)
Long (Buy) Positions Using Strategy
- On the ADX, the dotted green should be above dotted red and the solid blue line should be steadily rising
- Look for a Candlestick with a tail pointing to a Down Arrow Fractal
- When you see this Down Arrow Fractal, enter Long.
- Place stops 5 pips below the low of the Fractal Candle.
- Exit using proper money management or upon the cross of the dotted green and red lines in the ADX.
Long Position Example 1 :
Long Position Example 2 :
Short (Sell) Positions Using Guru Strategy
- On the ADX, the dotted red line should be above dotted green line and the solid blue line should be steadily rising
- Look for a Candlestick with a tail pointing to a Up Arrow Fractal
- When you see this Up Arrow Fractal, enter Short.
- Place stops 5 pips above the high of the Fractal Candle.
- Exit using proper money management or upon the cross of the dotted green and red lines in the ADX.
Short Position Example :
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